Default rate on bills hits 15-month high

The default rate on bills reached its highest level in 15 months in November. The Bank of Korea announced Monday that the nationwide default rate on bills (based on the amount after electronic settlement adjustment) during November was 0.63%, an increase of 0.41% compared to 0.22% the previous month.

The figure was the highest since September, 1999 (1.12%), when 12 Daewoo affiliates entered into workout programs, and stood at a level similar its 0.53% and 0.62% levels, respectively, in January and February, 1998

The rapid rise in the default rate was attributed to the insolvencies of Daewoo Motor, Dong-Ah Construction and Korea Express.

By region, the default rate in Seoul rose from 0.21% the previous month to 0.64%, and regional default rate also climbed from 0.27% to 0.51%. The number of defaulted companies in the top 8 cities, including Seoul, during November, stood at 288. This was an increase of 12.1% compared to 257 companies the previous month. On the other hand, the number of newly established corporations was 2,826, a decrease of 164 compared to 2,990 companies in October.